Delphi Financial Woes Spell Uncertainty for Employees

Topics:  Delphi

Crystal Park
Washington, D.C.
January 5, 2006

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The decline of American car-makers and fierce competition from overseas suppliers have forced the largest U.S. auto parts manufacturer into bankruptcy. As the company negotiates deals, its employees are angry and worried about losing jobs.

Delphi is the largest auto parts manufacturer in the United States. Last October, it filed for bankruptcy. Since then, officials have been negotiating drastic deals to help them climb out of bankruptcy. Proposals for a 63 percent pay cut were withdrawn this month, but for the 50,000 workers, the situation is still uncertain.

"Honey, I'm scared to death because I could lose my job," said one woman.

Scott McCrumb is a shipping clerk at Delphi's Kokomo, Indiana plant where his mother, uncle and grandfather worked. A drastic wage cut would be devastating. "It would mean we couldn't live here any more," he said. "We couldn't be in this school district. We'd definitely have to sell our house."

Part of the problem is that Delphi is competing with Asian auto manufacturers who are producing high quality goods for much cheaper wages. "Today we are paying double, triple or more for hourly labor compared to what prevails in the marketplace," says Delphi CEO Robert Miller. "No business can survive doing that."

But Delphi has come under fire for giving pay bonuses and incentives, potentially worth hundreds of millions of dollars, to company officials even while filing for bankruptcy.

"Philosophers can speculate about fairness," responds CEO Miller. "I have to deal with reality."

The reality for thousands of workers potentially affected will be grim. The company says its unions have until next month to agree on a deal or it will ask the bankruptcy court to throw out its labor contracts.